Naspers CEO Bob van Dijk and Prosus representatives as Prosus began trading on the Euronext stock exchange in Amsterdam, Netherlands, on September 11. Picture: REUTERS/PIROSCHKA VAN DE WOUW
Naspers CEO Bob van Dijk and Prosus representatives as Prosus began trading on the Euronext stock exchange in Amsterdam, Netherlands, on September 11. Picture: REUTERS/PIROSCHKA VAN DE WOUW

Technology group Naspers’s attempt to reduce its weighting on the JSE while reducing its discount to underlying assets looks to be bearing fruit as its new listing in Amsterdam closed the week more valuable than its prized stake in Chinese technology group Tencent.

What remains to be seen is whether shareholders will elect to take up stock in the new vehicle or keep 100% of their investment in Naspers. 

Naspers’s new international listing, Prosus, had its stock market debut in Amsterdam on Wednesday, valuing it at about R1.9-trillion and handing Europe its biggest consumer internet company.

Peter Takaendesa, portfolio manager at Mergence Investment Managers said: “If you combine the Naspers and Prosus shares that a prelisting Naspers shareholder owns now, then their like-for-like investment in Naspers is actually up over 4% so far this week.”

Naspers closed the day on Friday 0.91% down at R2,496.95.  

Prosus ended the week with a market value of $134.44bn with its shares 1.66% up on Friday at R1,187.35. Its 31% piece of Tencent was worth about $132bn.

The listing relocates to Amsterdam a third of Naspers’s outsize valuation on the JSE, where fund managers had become forced sellers to avoid being overexposed to a single stock.

It is the biggest step yet by CEO Bob van Dijk to reduce a valuation gap between Naspers and its Chinese moneymaker, Tencent.

Shareholders have the option to elect to get more stock in Naspers, or stock in Prosus, on a one-to-one basis for each share they hold in Naspers. If a shareholder has 1,000 shares in Naspers, they can elect to get 1,000 shares in Prosus, according to the arrangement. 

Nesan Nair, portfolio manager at Sasfin Securities, said to his knowledge most shareholders wanted to go for Prosus. Now that investors have an avenue to invest in Naspers’s international assets, Nair said over time demand for Naspers will weaken, but it will still be strong.

Despite this feeling among stockholders, investors may have to consider how tax authorities will charge them for the transaction, particularly capital gains — a tax levied on profit from the sale of property or an investment.

“If we had the option, we would take more Prosus shares,” said Asief Mohamed, the chief investment officer at Aeon Investment Management. He explained that for their clients, mainly consisting of retirement funds and unit trusts, the transaction would not attract capital gains tax (CGT). 

For individual investors, the story may be different.

“Individual Naspers shareholders will be subject to CGT now if they elect to receive Prosus shares. However, it does not automatically mean that they will pay CGT as some might have capital losses from other investments in their portfolios to use to offset the CGT that may be due on their Prosus shares,” Takaendesa said.

“Local pension funds who elect to receive Prosus shares and individuals who elect to receive more Naspers shares will not pay CGT now but will still be subject to tax whenever they will liquidate their investments in the future. So the difference is just the timing of the payment of tax.

“Given that the majority of Naspers shareholders are pension funds and also that the Prosus shares have traded well so far, it is likely that most investors will elect to receive Prosus shares,” he said.

Those going for more Naspers shares will see their base cost per share decrease as the new shares will be at zero cost, said Nair.

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